Your Excellency,
We at the Consumers Federation of Kenya (Cofek) trust that this letter finds you well and in high spirits. From the onset, allow us to highly commend your ongoing crackdown on corruption and illegal constructions on riparian land and on road reserves.
Please allow us to draw your kind attention to the National Treasury proposal to load an additional 16% on the cost of fuel with effect from September 1, 2018. Principal Secretary Dr Kamau Thugge, in his announcement, said that the Government was complying with a conditionality from the International Monetary Fund (IMF). The National Treasury agreed, in 2015, to re-introduction of VAT on fuel as part of the conditions for the Sh150 billion standby credit facility.
Currently, total taxes and levies on Super Petrol stands at Sh39.37, Diesel at Sh29.78 and Kerosene at Sh11.78 per litre. Loading 16 per cent VAT on fuel will escalate the cost of a litre of Super Petrol to over Sh130 in Nairobi and in excess of Sh145 per litre in far flung areas. Diesel, will rise to over Sh119.
Further to our separate petition to the National Treasury Secretary, the Attorney General and the Energy Regulatory Commission, we humbly and with respect, hereby petition you to order for either an indefinite suspension and or annulment of the proposed move on the following grounds;
- Kenyans are severely over-taxed. Unfortunately, a third of these proceeds finance corruption and wastage in the public sector. From PAYE, VAT, Excise tax on essential commodities, proposed housing tax, punitive electricity tariffs, proposed road tolling levy among a host of other regulatory taxes, the unbearable burden on taxation ought to be eased not augmented further.
- We are concerned that the proposal to add VAT on fuel is driven by the IMF and not the Kenyan Government. Article 1 of the Constitution lists Kenya as a sovereign State. There is no justification whatsoever for Kenyans to be controlled, directly and or indirectly, by other external agencies and or forces. Interest of Kenyan consumers at Article 1 of the Constitution as read together with Article 46 of the Constitution, comes first.
- The pronouncement by the National Treasury, therefore, fails the threshold of Article 10 of the Constitution on public participation and related national values. It is equally unsupported by the Finance Bill 2018/9
- There is excessive taxation on fuel already. If allowed, the move will put the tax and levies on a litre of Super Petrol to more than Sh70. This will see an upsurge in the cost of production and serve to decelerate economic growth. Shrinking of consumer spending, unemployment and flooding of counterfeit goods into the market will be inevitable.
- In order to realize the “Big 4 Agenda” it is our legitimate expectation that the tax burden ought to be lessened on all forms of energy, fuel included if your new targets must be realized.
- By dint of this proposed measure, the cost of travelling, transport of goods, food, thermal-generated electricity and general inflation will radically rise.
Accordingly, we request as follows;
- The proposal to load VAT on fuel be indefinitely suspended and or totally annulled
- The ERC fuel formula prescribing the monthly cost of fuel be replaced with market forces of supply and demand
- If VAT must be loaded, then road maintenance levy and other taxation be drastically reviewed to keep the fuel prices lower and predictable
We look forward to your early and favourable response. Thank you.
